Forexpros.com Daily Analysis – 11/08/2010

ForexPros Daily Analysis August 11, 2010

Fundamental Analysis: Initial Jobless Claims

The Initial Jobless Claims is a seasonally adjusted measure of the number ofpeople who file for unemployment benefits for the first time during thegiven week. This data is collected by the Department of Labor, and publishedas a weekly report. The number of jobless claims is used as a measure of the health of the jobmarket, as a series of increases indicates that there are fewer people beinghired.On a week-to-week basis, claims are quite volatile.Usually, a move of at least 35K in claims, is required to signal ameaningful change in job growth.A higher than expected reading should be taken as negative/bearish for theUSD, while a lower than expected reading should be taken as positive/bullishfor the USD. The analysts predict a future reading of 465.00K.

—

Euro Dollar

The Euro broke the support specified in yesterday’s report 1.3133, anddropped as expected, only to stop at 1.3070, without reaching the suggestedtarget. Then (which is a lot more important), the price jumped in thepost-Fed chaos to 1.3226 (7 pips below our resistance), testing thepreviously broken trend line, accurately (please refer to the attachedchart). If it a well known technical principle that such an accurate retestconfirms the break it followed, and the new direction, which is down in thiscase. Looking at the attached chart, we can see that: 1. the rising trendline was broken decisively and 2. the price retested this line in anaccurate fashion. These are obvious indication of a falling trend.Therefore, unless the price goes back up to trade above the broken trendline, we expect more downside activity. Short term support is at 1.3032,which we are trading just above at the moment. If broken, the price willdrop targeting the important Fibonacci level 1.2961, and if broken 1.2875.On the other hand, resistance is at 1.3158, and if broken, this pair willcontradict all what we have said, and will shoot up to 1.3255, and may be1.3347.

The Dollar/Yen broke the support specified in yesterday’s report at 85.78,and dropped to 85.16, approaching this year’s low of 85.00 which we haveseen on Friday. However, the price consolidated above 85, and corrected thedrop up to 85.45. With this, we see a continuation of the correction fromFriday’s low, after hitting another, lower target for the downward wave wehave been talking about for weeks, , but what are the next targets? In theattached chart, which is a weekly one, we can see the falling channel fromSep 07 top. Although the bottom of this channel is very far away, and isjust above 74, but there is an interesting trend line inside it, combiningthe monthly lows of Dec 08, Jan & Nov 09. This line is around 82.65currently, providing us with a perfect target for this dropping wave, sincewe still expect, as we did before, that it will dive below 84.81. Therefore,we expect the price to reach this target, and as we do, we also realize thatthe limited volatility of this pair indicates that this will take some time.As for the short term, the support is at 85.16, and breaking it wouldindicate that we are already moving lower with the objective of breaking84.81, and reaching lows not seen in 15 years. This will target 83.87 & at alater time, we still believe in our 82.65 target. The resistance is at85.81, and if broken, the price will continue its bounce, targeting 86.43 &87.49

Support:* 85.16: “post-Fed” low.* 83.87: Fibonacci extension level 138.2% for the falling wave from 86.86,compared to the wave which started at 88.10.* 82.65: the trend line combining the monthly lows of Dec 08, Jan & Nov 09,on the weekly chart.

Resistance:* 85.81: short term Fibonacci 61.8% level .* 86.43: the top of the rising corrective trend channel on the hourly chart.* 87.49: Jul 29th high.

Disclaimer:Trading Futures and Options on Futures and Cash Forextransactions involves substantial risk of loss and may not be suitable forall investors. You should carefully consider whether trading is suitable foryou in light of your circumstances, knowledge, and financial resources. Youmay lose all or more of your initial investment. Opinions, market data, andrecommendations are subject to change at any time.